Philippines close to LNG hub pick

The Philippines government could select the winner as early as this month for the nation’s first liquefied natural gas hub after years of negotiations, various tender processes and frequent delays, writes Amanda Battersby.

Three contenders are still in the fray according to several industry sources. They are Tanglawan Philippines LNG, a joint venture between China National Offshore Oil Corporation (CNOOC) and local company Phoenix; Tokyo Gas with Philippines player First Gen; and the Philippine National Oil Company (PNOC).

The Department of Energy is understood to have come up with a short-list of three, whittled down from 18 proposals, some of which were said by sources to have not complied with submission criteria.

“Based on PDNGR [Philippine Downstream Natural Gas Rules], anyone who has the qualification can participate but there will only be one to put up the terminal,” said Philippines Energy Secretary Alfonso Cusi.

PNOC is said to aspire to operate the project but the company needs to bring in a partner.

The state-owned player said it is seeking a co-venturer to design, build, finance, operate and maintain an LNG hub in Batangas on the island of Luzon.

Interestingly, PNOC has given prospective partners until 21 December to submit eligibility documents while Cusi last week told Reuters he was hoping for the winning proposal to be decided by the end of November.

Cusi reiterated to reporters that the Department of Energy would have the final say on which company would land the LNG terminal contract, for which almost 20 international and local companies or consortia had registered their proposals.

CNOOC, via CNOOC Gas & Power, and Phoenix earlier signed a memorandum of understanding to study, plan and develop an LNG receiving and regasification project in the Philippines.

Industry sources said that CNOOC Gas & Power would engage its sister company Offshore Oil Engineering Company (COOEC) as contractor to build the LNG terminal if its offer is successful.

Australia’s WorleyParsons has carried out engineering work on its proposal and completed the front-end engineering and design for the CNOOC proposal.

The proposed Philippines LNG hub and power project, which could start operations via a floating storage and regasification unit, has been mooted for some years now.

The government might want to have the LNG import facility up and running as soon as possible but 2024 is seen as crunch time because production from Shell’s giant Malampaya field off the Philippines could be in significant decline.